Tuesday, January 29, 2013

Is global inequality inevitable?

Philanthropy is on the rise, that's for sure. In recent years a number of high profile US billionaires such as Mark Zuckerberg, George Lucas and Michael Bloomberg have publicly pledged to give away at least 50% of their wealth. Some individuals have gone even further: Warren Buffet has famously pledged to give away 99% of his wealth (est. $52 billion), mostly through the Bill and Melinda Gates foundation. The Gates name is synonymous with wealth but it is now the leading name in philanthropy. Their foundation has an endowment of $31 billion, of which an estimated $25 billion has come from Bill and Melinda Gates' own personal fortune. That's more than double the size of the United Kingdom's foreign aid budget which sits at a respectable £6 billion.

Speaking of foreign aid budgets, the United States gives away a whopping $52 billion per year to poorer countries. China alone has invested $6 billion in African infrastructure as it looks to develop access to the continent's mineral reserves, which it hopes will power its own continued economic growth. There is also a huge volume of money spent on institutions such as United Nations, World Food Program and World Bank, as well as countless charities and NGOs around the world working to improve people's quality of life.

So with all this money flowing around, why aren't things getting better? The $52 billion foreign aid from the United States is more than the GDP of 173 countries - surely poverty, famine and drought should be a thing of the past? Surely this money should be able to help alleviate people's misery and fund accountable governments who have the best interest of their people at heart?

Well, lets look at a recent example. Over the last 10 years the largest example of an ongoing reconstruction project has been that of Afghanistan. The United States has spent $100 billion on aid and reconstruction projects alone as part of the effort to stabilise the country. $100 billion on a country with a GDP of $18 billion. Now of course there are some unique problems in Afghanistan such as the ongoing Taliban insurgency - but the Special Inspector General for Afghan Reconstruction stated that 85% of the aid budget had been wasted on overheads, corruption or simply poorly managed.

The same situation can be found in Iraq which was described as 'the wild west,' with funds being kept as freshly printed $100 bills. During the CPA's control of Iraq it was estimated that $8.8 billion was lost due to the lack of oversight. One story tells of an American soldier being asked to help the Iraqi boxing team get itself back on its feet but he gambled the money away. No one knew how many thousands he'd lost because there was no record of what he'd received.

Now I suppose it's easy enough to discount aspects of those two examples to the unpopular administration in the United States however in both situations even with the countries holding their own free (well...) elections the problems continued. People were quick to their new positions of power and to hand out favours to tribe or family members. Jobs were handed out on a basis of patronage and not qualifications. Entire sects within the population such as the Sunni's in Iraq or non-pashtuns in Afghanistan were sidelined by more populous and thus more powerful in electoral terms. The Afghanistan's President, Hamid Karzai's, brother who continues to hold a position of power despite being consistently linked with the heroin trade.

You see, the one thing that can be only be guaranteed from access to the vast wealth of the world's top 100 earners is that corruption would prevent the bulk of it reaching those who need it the most. That's not to say that we shouldn't try; as I pointed out at the start of this article, a lot is being done but the answer is not to simply flood poor regions with money without first developing their own internal structures. Without a strong and independent judiciary capable of taking action against corrupt individuals and a legitimate government in the eyes of the people, we will see no improvement in the situation in the poorer parts of the world; this isn't something that money can necessarily buy. Circumstances dictate that. The Arab spring is the perfect example of changing circumstances forcing a region's governments to adapt to the needs of the people.

The other thing we must remember is that humans are by our very nature devious creatures. Even if you could theoretically level the playing field there will always be those willing to work harder than others, those who are smarter, faster, stronger and there are those who are willing to cheat, steal or even kill to advance their own agenda. There are those of us who are apathetic to money and those of us who think that we should never have to work a day in our life and we should be given everything. Inequality is inevitable. The question we have to ask is: at what level are we prepared for it to start? And we need to acknowledge that money is not the only solution.